Italian firm Parmalat is reportedly mulling the acquisition of Brazilian dairy group Lacteos Brasil. According to reports carried by Brazilian local dailies, the Italian firm is currently in talks with the Brazilian company over a potential acquisition. Brazilian newspaper Valor Economico reported Parmalat is keen on the investment as a measure targeted at countering a takeover offer from a larger rival.  

However, private equity firm Laep Investments, a joint venture owner of Lacteos Brasil, declined to comment on the Newspaper reports when contacted by Reuters. But even so, there was an increase in Laep Investments share trading with the speculations. The shares closed 1.9 per cent higher Friday on the news, signaling investors had responded well to the speculation.

According to the Valor Economico report, Parmalat, which is already one of the leading UHT milk companies in Brazil, could pay up to €2.50 billion for the Sao Paulo-based dairy business in an all-stock deal. The investment could make Lacteos Brasil the largest shareholder in the Parma-based firm, giving it a stake of around 30 per cent, the newspaper added, but did not disclose the source of its information.

Lacteos Brasil group is majority owned by Laep and emerging markets private equity group GP Investments, but there are minority shareholders who would need to approve a deal. Parmalat has long been a potential takeover target. This time last year minority institutional investors – including BlackRock and Goldman Sachs – were trying to weaken the position of chief executive Enrico Bondi.

Reports at the time suggested these 17.6 per cent equity holders wanted to take over Italy’s main dairy company in a consortium with a trade buyer. O Estado de S Paulo supported Valor’s claims and said Parmalat is concerned that the likes of Nestle could launch a hostile takeover.

Lacteos Brasil runs the Italian brand in Brazil and is one of the largest private sector dairy companies in its domestic market. It was formed at the end of last year when GP and Laep-backed LeitBom agreed to acquire Bom Gosto, the company behind the Corlac, Sarita and Lider brands. The terms of this transaction, which completed in January, were not disclosed.

The Parmalat Group is one of the few major Italian multinationals in the food industry and a global player in the production and distribution of foods such as milk, dairy products (yogurt, cream based sauces, desserts and cheese) and fruit beverages, which generated revenues of about 4.3 billion Euros in 2010.

13 March 2011